Former Cleveland Clinic Innovations executive pleads guilty to $2.7 million fraud against hospital system

Thursday, 12 October 2017, 04:04:04 PM. The former executive director of Cleveland Clinic Innovations has agreed to serve several years in federal prison after pleading guilty Tuesday to a scheme that saw him help defraud the Clinic out of more than $2.7 million.

Gary FingerhutCleveland Clinic

CLEVELAND, Ohio -- The former executive director of Cleveland Clinic Innovations has agreed to serve several years in federal prison after pleading guilty Tuesday to a scheme that saw him help defraud the Clinic out of more than $2.7 million.

The U.S. Attorney's Office charged Gary Fingerhut with conspiracy to commit wire fraud and honest services wire fraud and making false statements to the FBI. Prosecutors said Fingerhut, 57, of Solon received about $469,000 in illegal payments as part of the multi-million-dollar scheme.

Fingerhut was charged in September and formalized his plea agreement Tuesday by admitting to the charges in front of Magistrate Judge William Baughman.

As part of the plea, both federal prosecutors and Fingerhut have agreed to ask for a sentence that will likely be between 41 and 51 months in federal prison.

Prosecutors will also ask a judge to order Fingerhut to pay restitution for the total amount the Clinic lost in the scheme, though Fingerhut can argue to pay about $469,000.

U.S. District Judge Christopher Boyko will sentence Fingerhut on Jan. 30. Fingerhut was released on $20,000 unsecured bond after surrendering his passport.

Cleveland Clinic Innovations is a branch of the Cleveland Clinic established to assist Clinic doctors and staff with the invention and marketing of medical products, often through spin-off companies. Fingerhut was hired as Cleveland Clinic Innovations' general manager of information technologies in 2010, and was named executive director in 2013. He was fired in June 2015.

The activities of one of those spin-off-companies, a Clinic subsidiary called Interactive Visual Health Records, spurred a multi-year FBI investigation.

Prosecutors say Fingerhut was part of a scheme with the chief technology officer of iVHR and others to defraud the Clinic. The scheme involved having iVHR contract with a shell company to get paid for services the shell company never intended to provide. Instead, the services were done by an outside, out-of-the country company that was paid less than called for in the contract with iVHR.

The U.S. Attorney's Office identified iVHR's chief technology officer as "W.R." It said W.R. gave Fingerhut the money he "earned" between 2012 and 2015 and that Fingerhut lied about the nature of the money when the FBI interviewed him in June 2015.

W.R. has not been charged.

Fingerhut released a statement through his attorney when he was charged in September apologizing for his actions.

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